After a Slow Start, Bitcoin Will Hit Its Prime in the Years to Come

A lot of things can change over the course of nine years. In the Bitcoin world, we have seen major changes as well. While there is still work to be done, these are still the early stages of cryptocurrency in general. Adoption will only increase moving forward, as the best has yet to come.

The Bitcoin Story so Far

It has become evident Bitcoin has seen some interesting changes. Things have evolved in an interesting direction compared to nine years ago. It is safe to say the currency has come a very long way since the initial release. What started out as a niche project has turned into the world’s leading cryptocurrency. Moreover, cryptocurrency is now a phenomenon which can’t be ignored any longer.

As of last year, banks finally started showing an interest in Bitcoin. With a few institutions venturing into the world of Bitcoin futures, the tone is set. Other institutions even publicly acknowledge Bitcoin is a threat to their business model. All of this further confirms the best is yet to come for the world’s leading cryptocurrency.

At the same time, some problems have remained. Bitcoin still lacks scaling, it’s not the most technologically-advanced solution, and it is losing traction among early adopter merchants. However, that doesn’t mean people will stop using Bitcoin as a payment method all of a sudden either. In fact, it seems now is a good time to stop thinking about Bitcoin as just an investment vehicle.

What Comes Next for BTC?

The big question is how this industry will evolve over the next nine years. Right now, there is so much focus on the Bitcoin price, people tend to miss out on the big picture. Over one in two Square merchants is willing to experiment with BTC payments. That is an extremely positive signal for the cryptocurrency industry as a whole.When the merchants pay attention to BTC as a currency again, big things will happen eventually.

Moreover, the world’s leading cryptocurrency is maturing in the technology department as well. Scaling is becoming less of an issue with SegWit adoption on the rise. Add the Lightning Network to this trend, and things will only get better from here on out. Additionally, Rootstock is nearing completion. This project will bring smart contract technology to the Bitcoin network.

Additionally, we see the public perception of this cryptocurrency change as well. Adults are becoming aware how BTC can be a part of everyday life without too many problems. The global and borderless nature of this currency has a lot of potential when used properly. The industry also continues to create jobs left, right, and center, which should not be overlooked either. This is still the early stage of development, and a lot of things will change in the years to come.

Subscribe to our newsletter

The Ethereum Foundation is always looking to make a positive impact. They are actively looking into supporting applications, smart contracts, and other innovative projects. Earlier this week, the Ethereum Foundation announced their first grants to help bolster this ecosystem.

The Ethereum Foundation Grants

With a grant issued by the foundation, developers can keep working on their projects. There is a lot of research and development that goes into every single project. Empowering these innovative developers in any way possible is what the Ethereum Foundation aims to achieve first and foremost. Collaboration is critical in the way of blockchain technology and any feature derived from it.

For the community, these grants also play a big role. The “decisions” made by the Ethereum Foundation highlight projects worth keeping an eye on. No ecosystem is complete without looking at the technological implications from all different sides.Several key aspects of the Ethereum network need more support. With these grants, it becomes a bit easier to address those areas and support the people who attempt to improve the network as a result.

Especially in terms of scalability, usability, and security, there is still room for improvements. The Ethereum Foundation will continue to issue grants to solidify all of these different aspects moving forward. It is important to note support projects have no ICOs, token sales, or anything along those lines. These are all projects designed to make Ethereum better and stronger.

The “Lucky Winners” of the First Grants

Quite a few projects successfully received a grant. We see multiple projects focus on hackternship, which tackle Geth, Solidity, and Deterministic WebAssembly. Scalability is also a major area of work right now. L4 Research, Prysmatic Labs, Barcelona Supercomputing Center,  Turbo Geth, and Plasma Taiwan Dev all received grants of various sizes. These projects focus on sharding, state channels, Plasma, and so forth. All of these improvements will be quite positive for Ethereum once they go live on the network.

It is evident there are still a lot of improvements to come to Ethereum. The Ethereum Foundation helps all winners with technical advisory, a platform to share their work, and the non-dilutive funding. With L4 Research pocketing $1.5m, it seems state channels research is of the most interest as of right now. The Casper contract formal verification by Runtime Verification also netted a $500,000 grant. Casper is Ethereum proof-of-stake implementation, which should come to market relatively soon.

Cryptocurrency markets are not off to a good start in 2018. Most markets have lost nearly half of their value during the first few weeks. This most recent dip has pushed the momentum back as well. Even so, analysts are convinced this year will be very bullish for all cryptocurrency markets in the long run. Especially Bitcoin may see some big gains.

Bitcoin Scalability Improvements?

All cryptocurrency markets have seen major declines throughout the first seven weeks of 2018. Although Bitcoin showed some good momentum this week, most gains have been lost once again. Whether or not this is a bubble effectively bursting, remains to be determined. However, there are still a few solid reasons as to why things may turn out for the better. Julian Hosp remains bullish on cryptocurrency for quite some time to come.

Especially where Bitcoin is concerned, things can still improve quite a bit. With new scaling solutions coming to the ecosystem, a lot of progress will be made. Segregated Witness is now enabled by default through the Core client. It has also become more convenient to use altogether. If this adoption rate improves, the Lightning Network has a fair chance of succeeding as well. For now, there is no official release date for the Lightning Network as of yet.

With a lack of scaling, Bitcoin made a lot of headlines due to mounting fees. At one point, a Bitcoin transaction cost over $20. It is far from ideal, yet solving the problem is not all that easy. With SegWit and LN, those fees should eventually come down over time. Only time will tell if this works as people expect it to. Moreover, the addition of smart contracts to Bitcoin through Rootstock is something to look forward to.

Other Cryptocurrencies and ICOs

Cryptocurrency is about so much more than just Bitcoin, though. More regulation of this entire industry can be a good thing in many different ways. If an industry is regulated, it is “validated” in the eyes of the general public. For now, we see dozens of countries looking into regulating Bitcoin and other currencies. Not everyone is a big fan of regulation, as it imposes severe restrictions in some cases. For now, it seems further regulation will help legitimize cryptocurrencies and digital tokens moving forward.

Most people expected institutional investors to make a big impact on cryptocurrency. Through the Bitcoin futures, that should have happened some time ago. So far, the initial interest in such futures has been rather limited. Even though the volume is picking up, it remains to be seen if institutional investors effectively show a real interest in cryptocurrency. Depending on how this trend evolves, we may see some big progress in overall prices moving forward.

Last but not least, the elephant in the room is the ICO industry. To many people, it seems initial coin offerings are the downfall of cryptocurrency. With the SEC cracking down on illicit projects, things will improve moving forward. It all comes down to more legitimate coin offerings in the future, and which companies will embrace this model. Especially with Telegram turning their ICO into an IPO of sorts, it is evident the business model itself may see some big changes.

SegWit Adoption

SegWit adoption has been steadily rising since its release in August 2017, albeit not as quickly as some would like. The problem is that it has to happen piece by piece, with each wallet, exchange, or other service provider rolling out the compatible address itself. Because each organization has both its own type of process — as well as its own issues — SegWit adoption has not happened overnight.

This phenomenon explains why the number of SegWit transactions still vary, accounting for between 10 to 20% of total transactions — though that percentage is set to increase. The protocol has already garnered some impressive results: As of today, February 20th, SegWit transactions account for almost 14% of the total — it peaked a few weeks ago when the transactions made up more than 18% of the total for the first time since activation.

As noted above, that percentage is likely to increase soon with announcements today from global leading exchanges Coinbase and Bitfinex confirming their adoptions of SegWit. Among other notable providers that have unrolled the protocol are: Shapeshift, Ledger wallet, TREZOR, Samourai wallet, and Edge Wallet. Several others have deployed SegWit, too, like the Kraken exchange and the CoinMall marketplace. 


As for users of SegWit enabled exchanges like Bitfinex, the most noticeable changes in the short term will be, simply, a more efficient transaction process, with decreased transaction fees and improved speed — as a result of being able to fit more SegWit transactions in Bitcoin blocks. According to the company’s blog post today, the SegWit implementation means Bitfinex users “can benefit from lower BTC withdrawal fees (approximately 15%) and improved processing times on transactions across the Bitcoin network.”

Bitfinex CEO Paolo Ardoino puts it as follows:

“As a premier exchange, Bitfinex is committed to improving its market-leading offering for our loyal and discerning customers. SegWit provides not only an immediate benefit for users but also a foundation for future Bitcoin development. By supporting SegWit addresses, Bitfinex is tackling three of the biggest crypto-enthusiast concerns: transaction fees, transaction speed, and total network capacity. We are delighted that through this implementation we can provide our customers with bitcoin withdrawal fees that are up to 20 percent lower, as well as faster-than-ever transaction speeds.”

Lightning Network

In the context of the Bitcoin scaling issues, it’s important to discuss the development of another promising concept: Lightning Network (LN). Being initially introduced with the aim to, simply, make the Bitcoin network more useful, LN is a decentralized network of payment channels which permit users to make micropayments between two parties without the need to broadcast directly to the blockchain. As a result, transaction fees are decreased and the speed of the whole payment process is too.

Cryptocurrency idealists have envisioned Bitcoin becoming a sort of “free banking” system from the start. Consider LN in that context: Just like people don’t have to carry around weights of gold to engage in commerce, Bitcoin users need not clear all transactions “on-chain” to enjoy the benefits of the digital currency. With LN, they can transact using the network and clear their balances on the underlying blockchain — just like how people exchange gold-backed notes with banks. The most exciting part, in this example, is that rather than needing to rely on an intermediary bank, LN permits people to act on their own.

Today, Coinbase — cryptocurrency exchange, brokerage, wallet, and operator of GDAX — and Hong Kong-based exchange Bitfinex have announced the implementation of P2SH Segregated Witness (SegWit). As per the companies’ tweets, users will experience improved transaction processing times and lower fees across the Bitcoin network.

For Coinbase, this process began in December, when vice president and general manager Dan Romero indicated to investors and users that the exchange would adopt the SegWit protocol in early 2018

The protocol, an oft-debated measure introduced as a means of scaling Bitcoin to meet increased demand, is expected to decrease congestion in the cryptocurrency’s network, resulting in faster transaction times and lower fees.

Fees have been a huge problem for Bitcoin users — although they have fallen to recent lows at an average of $0.79 on Sunday. In December, amidst an upsurge in use and value of the cryptocurrency, prices reached peaks of up to $34.00.

What is SegWit?

SegWit is a Bitcoin protocol improvement that facilitates scaling. The SegWit implementation will provide Coinbase and Bitfinex users with lower transaction fees and improved processing times on transactions across the Bitcoin network. This happens by increasing block size limits by separating signature data from transaction data.

In addition to increasing capacity, SegWit will also effectively fix transaction malleability, a potential attack based on the modification of transaction IDs prior to network confirmation. Further, SegWit also lays the foundation for future Bitcoin development efforts like the implementation of Lightning Network, which will permit the network to process millions to billions of transactions per second.

Looking ahead

Moving forward, the question is what will happen as the Bitcoin network continues to grow. A hard-coded limit on the size of blocks limits how many transactions the network can process per second.

Some in the bitcoin community wanted to simply raise the block size — see Bitcoin cash. Instead of increasing the maximum block size, SegWit separates cryptographic signatures from the rest of the blockchain data, so these signatures aren’t counted against that one-megabyte block-size limit — consider it a de facto block-size increase.

That said, SegWit is not the be all end all: If 100% of transactions use the new protocol, it will roughly double the network’s capacity — but that’s it. Further increases will require more radical changes.


Romero said the exchange has carefully considered the implications of adopting SegWit:

“In terms of our engineering priorities, securely storing customer funds remains our top priority. Our next priority is to ensure that our platform remains performant during periods of peak volume,” Romero said.

The adoption of SegWit is a huge undertaking for the Coinbase because its platform is much larger than most other digital currency exchanges. The exchange has millions of users active each month, and it accounts for a significant portion of all Bitcoin trading. This means the impact of its decision to adopt SegWit could have repercussions on the entire cryptocurrency space.

Blockchain technology has proven to be quite appealing to companies all over the world. Some developers are even looking toward the future of this concept. Sidechains can alleviate a lot of stress from the main blockchain by focusing on specific types of information. The main business model of a blockchain won’t work well when it comes to scaling. With a sidechain, scaling concerns are less of an issue, assuming they are implemented correctly.

The concept of sidechains is nothing new in the world of blockchain technology. A few projects already focus on leveraging this new technology. However, there is a big difference between testing the technology and implementing it in the real world. Sidechains may effectively become a necessity if blockchain is ever to go mainstream. With a strong focus on interoperability and scalability, this implementation of blockchain technology will certainly be of great interest.

Sidechains Alleviate Blockchain Scaling Concerns

More specifically, leveraging sidechain technology offers a few benefits. Connecting different blockchains together is not natively supported. However, with sidechains, it is effectively possible for projects to let different chains communicate with one another without any major issues. Any transactions occurring on a sidechain can be picked up by nodes on the main chain to record it. Every sidechain will trust the main chain for cross-chain transactions of any kind.

There are some other benefits to using sidechains as well. Rather than using the main chain to record transactions one after another, sidechains can alleviate the concerns. There is an option to introduce parallel computing in this regard. This also allows for on-demand transaction scaling across the different chains accordingly. It provides a lot more blockchain “capacity” without causing any bloat. With more sidechains, transaction scaling also becomes a trivial matter eventually. On paper, this technology sounds incredibly powerful, for obvious reasons.

The big question is whether or not any projects will pursue this option. Not every use case for blockchain technology warrants the use of parallel chains. At the same time, there is no reason not to look into this option either. With a proper multi-chain interoperable infrastructure, a lot of potential use cases can be unlocked. Whether or not that is the next logical step in the evolution of blockchain, remains to be seen. It is certainly possible we will see a few interesting developments in this regard.

Bitcoin users all over the world have high expectations for the Lightning Network. This technology is not close to being production ready, though. Several users have conducted some LN tests on the Bitcoin testnet. So far, these tests yield some great results. Low fees and fast transactions are everything Bitcoin doesn’t have right now. It is an interesting development to keep an eye on. It is evident the Lightning Network will spur a lot of debates moving forward.

For the Bitcoin ecosystem, scalability has been a big problem for many years. High fees and slow transactions have become the new normal. It is not an ideal situation for the world’s leading cryptocurrency whatsoever. In fact, it has caused a lot of friction in the cryptocurrency industry as a whole. The Lightning Network needs to hit the main net soon rather than later.

Lightning Network Tests Yield Positive Results

For now, one can test LN functionality on the Bitcoin testnet. It seems the technology delivers on its initial promise. Fast confirmations and extremely low fees are what everyone is looking for. Unfortunately, that is impossible to come by when using regular Bitcoin transactions. It is evident a scaling solution needs to be put in place as soon as possible. Bitcoin used to be rather cheap to use, but things have gone awry some time ago.

It is evident the LN technology will help Bitcoin scale first and foremost. Whether or not it will be too late by then, remains to be seen. Bitcoin has lost a fair bit of its appeal in recent months. There is a growing list of altcoins which are cheaper and faster to use. Litecoin is a good example of how this can be achieved with relative ease. Then again, Bitcoin is still the top cryptocurrency in the world. It is also regaining some of its lost value as we speak, which is a positive sign.

What the future holds for Bitcoin, remains to be determined. The Lightning Network can bring much-needed relief to this network in the future. It is unclear when LN will effectively hit the main net, though. These successful trials are a positive sign. Using it in a real-life situation is something else entirely, though. If the Lightning Network fails to fulfill people’s expectations, things will not be pretty whatsoever. Bitcoin won’t disappear, but it’s not the currency people want it to be.

Header image courtesy of Shutterstock

Scalability is the talk of the town in the cryptocurrency world. Every network and blockchain are scrutinized based on their performance. Although the Ethereum network isn’t perfect, an interesting milestone has been reached. The network successfully processed 1 million transactions over the past 24 hours. With an average of 43,963 transactions per hour, things are looking pretty good. It’s certainly a lot better compared to Bitcoin, even though that network transferred more value in the same period.

Comparing Ethereum and Bitcoin usually makes little sense. Both projects are very different from one another. However, both currencies are considered to be a store of value at this point. This is mainly thanks to the value gains for both currencies throughout 2017. As a result, it is worth exploring how both networks perform at any given moment. Over the past 24 hours, Ethereum comes out a lot better in most regards.

An Interesting Milestone for Ethereum

More specifically, the Ethereum network handled over 1 million transactions without too many problems. Bitcoin processed 412,883 transfers in the same period, which is less than half. Even though Bitcoin processed over 17,000 transactions per hour, it’s a lot less compared to Ethereum. That network has an average of nearly 44,000 transfers per hour. More importantly, Bitcoin fees are so high anything else looks cheap right now.

The average Bitcoin transaction is subject to a fee of $28.09 in the past 24 hours. At the same time, the median transaction fee is $16.59. Both of these numbers are unacceptable. In Camp Ethereum, the average fee is $0.9912 with the median transaction fee going as low as $0.368. It is evident this discrepancy cannot be overlooked any longer. Even though one BTC is 22.5 times as valuable as one ETH, this difference in fees is getting a bit absurd. If people were told they’d pay $20 in BTC fees three years ago they would’ve laughed out loud.

Despite the numbers not favoring Bitcoin, the network still has its strengths. Over 17% of the market cap’s value was transferred don the network in the past 24 hours. This is almost twice as high as Ethereum’s “spenditure” in the same period. Although most people would assume people hoard Bitcoin, this number is certainly interesting to keep an eye on. Moreover, the average transaction value for Bitcoin is $130,000. Ethereum, on the other hand, has an average value of $7,413. Interesting correlations and differences, to say the very least.

Most people will agree Bitcoin is struggling in many ways. On the technical level, the network is almost unusable for everyday purchases and needs. Joannes Vermorel provides an interesting solution in this regard. His idea is also pretty controversial, though, as it may not be feasible. Terabyte blocks would certainly solve a lot of issues in this regard. It may very well be an interesting opportunity for Bitcoin Cash developers to explore.

Scaling Bitcoin – or any of its hard forks – is not easy. So far, Bitcoin Cash seems to be better off than Bitcoin in this regard. However, we always need to look toward the future and make further improvements. Joannes Vermorel is one of the people thinking big in this regard. His new proposal, while technically feasible, certainly paints an interesting picture for the future. In his opinion, terabyte blocks should become the new normal over time.

Can Terabyte Blocks Even Work?

More specifically, the concept of terabyte blocks makes a lot of sense in many different ways. it would allow every human on the planet to send 50 transactions per day. That in itself would solve all Bitcoin scalability issues. Moreover, this would also help reduce fees to around one-tenth of a cent. An interesting proposal, although we will also need different infrastructure to accommodate such a change.

On-chain scaling solutions are always controversial. Not everyone can accommodate such changes due to technical reasons. Vermorel proposes mining pools build a terabyte mining rig at some point. It would run 256 different nodes, all of which require rather powerful hardware. One of those rigs would cost around $3.5m, which is quite a steep price. Add the extra storage on top of that and the electricity consumption, and the venture becomes ridiculously expensive. Moreover, we need more gigabit Ethernet connection options before this can even become feasible.

It is evident this proposal warrants some further investigation. Given Bitcoin Cash’s willingness to possibly scale to gigabyte blocks, terabyte versions are the next step in the evolution. It is unlikely Bitcoin would ever use such a proposal, as the developers prefer smaller block sizes. It’s always good to see such interesting scaling proposals. While neither Bitcoin nor Bitcoin Cash may follow this example, it shouldn’t be dismissed whatsoever.  

The Lightning Network will be a game changer for Bitcoin. That is, assuming this concept comes to market in the near future. A lot of progress has been made behind the scenes as of late. A successful mainnet test, a new explorer, and more developers working on this technology are all positive developments. The wait for proper scaling and microtransactions as part of Bitcoin is almost over, by the look of things.

Bitcoin users have been excited about the Lightning Network for some time now. The technology promises lower fees, instant transfers, and microtransactions. All of this is assuming the developers will deliver on this technology’s promise. We will find out if that is the case soon enough, by the look of things. Some major developments involving this technology will bring LN to market soon. No specific dates have been communicated at this point in time, though.

Lightning Network Development Progresses Nicely

With the first successful mainnet test, an important step has been taken. It is the first time such a major Lightning Network test is in the green across the board. This initial success shouldn’t be ignored, although it isn’t of great value for Bitcoiners either. It simply means the implementations are effectively capable of handling mainnet transactions. They will still need to be pushed to the limit, though. Without an official release date, it may still take weeks or months until we can benefit from this technology.

Additionally, the Acinq team launched a new Lightning Network explorer. Although this is only a minor tool, it shows things are evolving nicely behind the scenes. Users can visualize all payment channels on the network in real-time. This explorer works not just for Acinq’s own implementation, mind you. Various teams of developers are working on LN technology. Nodes can even advertise their own color and alias, which is rather nifty.

Last but not least, the Lightning Network still needs additional developers. There is a growing demand for coding expertise in this regard. Additionally, more testing participants are welcomed with open arms as well. No one can deny the LN technology is still in its infancy right now. Without proper testing, there is no point in bringing this technology to the masses. We can only hope more developers and testers dedicate their time to this project.

Header image courtesy of Shutterstock